Benefits of owning a house under mutual names

Will buying a property make sense by registering it with a single owner or several owners? We are looking at who may be joint owners of a land and its repercussions.

2 bhk flats for sale in kharghar, Home owners are often unsure of the ramifications of owning a single-name house property instead of common names. Prior to marriage, one of my coworkers had purchased a flat in his name. The EMI was serviced by the pair after marriage, in equal parts. However, he was surprised to find that the income tax gains on the home loan could not be asserted by his partner.

Benefits of owning a house under mutual names

Who will be a joint proprietor?

As a joint owner, there is no rule that regulates who you can add. It may be your business partner, or even relatives, a close relative (spouse, parents, kids, brother or sister).

It makes sense to include a close partner, whether a girlfriend or children if you are married, or parents if you are a single, even if you are funding the property alone. A individual who is attached to the arrangement as a joint owner does not need to contribute to the purchase of the land.

Take a shared home loan

Lenders demand that the mutual owner be included as a co-borrower when issuing a home loan. Lenders prefer to view applicants for home loans favourably, where the co-borrower is a close partner, such as a partner, parents or children. Where the co-borrower is not one of these close friends, most lenders do not entertain loan demands.  As the joint owner needs to enter the claimant as a co-borrower, whether the joint owner is a friend, wife, or a brother or sister, you will not get a home loan.

The property’s smooth succession

As most of today’s bought residential properties are apartments in housing societies, it is easier to buy joint titles. In the event if something happens to one holder, the corporation will normally pass the flat on behalf of the other joint holders without insisting on the other legitimate heirs’ probate or no-objection certificate.

Benefits of owning a house under mutual names

Benefits from income tax on shared home loans

Only the owner or the joint owner of the house may seek income tax benefits, whether for principal repayment on a home loan under Section 80C or for interest on a home loan under Section 24b. Consequently, you can not claim the benefits of a home loan, because you are the owner of the house, even though you are paying the loan.

A minimum home loan of Rs 50 lakhs might be sufficient for buying a house today. The interest will be about Rs 4.75 lakhs per annum @ 9.50 percent on this loan. You will only be entitled to assert Rs 2 lakhs if the house property is used for self-residence and is owned and serviced by you only, and the tax gain for the balance of Rs 2.75 lakhs will be lost. However, if the same property is bought in mutual names and the debt is serviced by both holders, you will both claim the tax gain of the loan. Rs 2 lakhs each, on the interest payment.

Similarly, if the house is jointly owned and the home loan is similarly serviced, for repayment of the principal home loan balance under Section 80C, then each of you will be entitled to assert this gain of up to Rs 1.5 lakhs each, assuming you do not have any other investment or expense applying for Section 80C.

Caution Word

Dividing the property would become a painful procedure in the event of a conflict between the joint owners, because the selling deed specifically states the share of each party along with the contribution of each party at the time of purchase.

If the group making the EMI payment tries to postpone the payment because of animosity between the joint owners, matters could get much more difficult in the case of housing loans. Both these considerations must also be taken into consideration when purchasing a property under the joint name.

                                                                                          

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